Friday, 28 August 2015

The Lancet published an embarrassingly bad editorial knocking the Public Health England report on e-cigarettes today. They appear to have given their smear story as an exclusive to the Daily Mail because that's how credible scientific journals work, right?

The hatchet job focuses on the conflicts of interest of two co-authors of one of the many studies cited by PHE in their report. Both were declared at the time and one of them isn't really a conflict of interest.

Regular readers will know that I'm no fan of Public Health England, but this is pathetic. I've written about it for The Spectator so please pop over there for a moment and have a read.

Thursday, 27 August 2015

Aseem Malhotra has inexplicably been on television again today spouting his latest scientifically illiterate theories. In recent months he has been lurching ever closer towards the low carb cult and the Atkins diet. He is now telling people to eat a low carb, high fat diet while simultaneously telling them to adopt the Mediterranean diet. The latter has never been properly defined but is certainly not low carb. I can only assume that he has now read more than one diet book.

In the last year or so, Malhotra has done his best to deter people
from taking statins, downplay the importance of physical activity, eat
more fat and not worry about how many calories they consume - strange
behaviour for a cardiologist. Perhaps, as Fergus says, he is trying to recruit new customers.

The
only upside about the cretin of Croydon appearing in the media is that
it stirs scientists into rebutting his drivel, so rather than fisk his
eat-more-fat-and-consume-more-calories article, here are a few comments from the Science Media Centre...

I can agree with only one point made in this rather confusing editorial
which seems to jump from one poorly proven hypothesis to another,
undoing the work of thousands of good quality research papers and backed
by years of careful research.

In my opinion, it is idiotic to suggest that calories don’t count and
then advocate a high fat diet. The editorial has muddled obesity
prevention with cardiovascular disease prevention. Obesity is only
prevented if energy intake is balanced by energy expenditure.

Adding fat to food is the easiest way to increase calories in food so
pouring large amounts of olive oil over food or eating loads of nuts is
not going to help prevent obesity!

Last year I wrote a post about what the Campaign for Real Ale described as its 'historic victory' of breaking the beer tie.

This is actually the second time that CAMRA has successfully lobbied to break the beer tie. They first did it in the 1980s when Thatcher forced breweries to sell off thousands of pubs. The unintended, but predictable, consequence was that thousands of pubs were bought up by property management companies.

These companies (pubcos) soon became the new villains in CAMRA mythology and last year they were cut down to size when the government (or, more precisely, the opposition plus the Lib Dems) broke the modern beer tie by banning pubcos from making it a contractual obligation for tenants to buy alcohol from them at a higher-than-market rate. This is known as the Market Rent Only option and tenants of large pubcos now have a legal right to it.

Pubcos that cannot make enough money without the beer tie will increase the rent, but the government has decided to regulate pub rents as well. Therefore, the likely outcome of the 'Save Our Pubs' campaign is that pubcos will sell off a large part of their estate.

CAMRA more or less openly wants them to sell their pubs because it believes that thousands of ruddy-faced publicans are ready to run them as independent concerns. This is a fantasy. There is not enough capital in the independent sector and you would have to be brave or foolhardy to buy a pub in Britain after successive governments have systematically shafted the industry. It is more likely that they will be sold off as shops and dwellings.

In other words, CAMRA's campaign will achieve the exact opposite of its stated aim of saving pubs.

I said all this last year and it did not go down well with CAMRA and their fellow travellers, who accused me of being in the pocket of the pubcos (and other such baseless non-arguments), but time is beginning to tell...

Punch Taverns has confirmed it has agreed to sell a package of 158 non-core pubs to NewRiver Retail, the UK REIT that specialises in the food and value sector, for £53.5m.

Why is Punch Taverns selling off these boozers? One tenant, Carol Ross, spoke to the Morning Advertiser yesterday...

The Roscoe Head in Liverpool has been in Carol Ross’ family for 30 years, 20 of which has seen her in charge winning a number of awards. Speaking to the PMA after receiving the news by post that her pub would be sold to New River Retail, she said she was “gobsmacked and upset” and now fears her pub was at risk of being redeveloped into a retail outlet.

Ross said she had been trying to buy the pub’s freehold, and had informed Punch she wished to opt for Market Rent Only (MRO) next year.

“From next year I have to be offered Market Rent Only, and I told them I would be taking it, that’s why they’re selling my pub - because I won’t be making them as much money. NewRiver Retail will own less [sic] pubs [under 500], so they won’t have to offer it,” she speculated.

According to the article, Ross's pub is a successful business so perhaps NewRiver Retail will keep it as a going concern, but their track record isn't great...

NewRiver
Retail acquired 202 pubs from Marston’s for £90m in 2013, with the
group announcing last month that good progress had been made in
converting a number to convenience stores.

Oh dear. Who could possibly have seen this coming?

Now CAMRA has been reduced to 'urging' pubcos to 'consider other options for sale, including offering pubs to community groups or licensees themselves, before selling to property companies'. I doubt pubcos are in any mood to take business advice from an economically illiterate pressure group that openly hates them. They will do whatever makes financial sense in a market that has been horrendously distorted by CAMRA and other useful idiots.

Wednesday, 26 August 2015

As reported last week by Guido and Catallaxy Files (but no mainstream media outlets that I know of), tobacco sales increased by 0.5 per cent in the first year of plain packaging in Australia. I didn't want to comment until I'd had a change to look at the newly published stats in depth, but I have now done so and the figures in Guido's report are spot on.

21,901,393,720 cigarettes were sold in the twelve months before plain packaging was introduced. In the next twelve months, 22,016,130,420 cigarettes were sold. This is a rise - a small rise but a remarkable one considering that sales had been consistently falling for many years before the policy was introduced.

As Sinclair Davidson has explained, advocates of plain packaging have done two things wrong in order to claim that there was a 3.4 per cent decline in tobacco sales in the first year of plain packaging. Firstly, they compared the calendar years 2012 and 2013 despite plain packaging starting at the beginning of December 2012. Obviously, they should be comparing December 2011-November 2012 to December 2012-2013. If they did that they would see that the difference is just 0.8 per cent.

In the context of a long-term decline in sales of around 5 per cent per annum, a fall of 0.8 per cent is a truly pathetic outcome from a policy that Simon Chapman, a pea-brained blowhard, has compared to a vaccine for lung cancer. But it gets worse for the wowsers...

The second thing the campaigners willfully ignored was the tax refunded on tobacco products which were never sold to the public. This is a significant number of cigarettes when you consider that lots of branded tobacco products had to be taken off the market when plain packaging was introduced and were later destroyed. According to newly released data from the Australian government, it amounted to 284 million sticks. When these cigarettes are subtracted from the pre-plain packaging period, it becomes apparent that sales-to-consumers rose by 0.5 per cent in the first twelve months of plain packaging.

The only missing variable here is the number of refunded cigarettes in the post-plain packaging period. This is unlikely to be zero, but is almost certain to be a lot smaller than that refunded as a result of plain packaging since plain packaging led to an exceptional, one-off destruction of tobacco products (literally). The figures for refunded tobacco in 2013 would make the comparison even more accurate but they would almost certainly change the final estimate by no more than a fraction of one per cent. Whichever way you slice it, the claim that was an immediate effect on sales from plain packaging is bunkum. And that's without even mentioning that growing black market.

You can see the data here, but as it requires a little effort to calculate the total number of cigarettes sold I have included the figures at the bottom of this post. (If you are on a Mac you may need to change the document's suffix to .pdf to read.)

Australia is in the process of conducting a post-implementation review into plain packaging. If this evidence is not front and centre, we will know that the process is a sham. Predictably enough, it seems that the
post-implementation review has already shifted the goalposts. The policy was
explicitly designed to reduce cigarette sales and smoking prevalence.
Since
it is now clear that it has had no measurable effect on either, the
review will instead look at whether it has reduced the appeal of
cigarette packs. That means looking at the same tenuous evidence that
was cited by campaigners in 2011 - evidence that tells
us nothing about the real world effects.

The
reality is that plain packaging did not accelerate the long term
decline in smoking rates or tobacco sales, but it did create a number of
negative
consequences for businesses, consumers and the government itself. Any
serious cost-benefit analysis would find multiple costs and zero
benefits.

As for the campaigners who have been so quiet about the new evidence, don't forget that they vilified Christian Kerr of The Australian last summer when he dared to say that tobacco sales had risen in the first year of the Australian plain packaging experiment. The portly propagandist Stephen Koukoulas was particularly vociferous, describing Kerr et al. as 'smoking fact deniers' and 'tobacco fact deniers'. The hopelessly biased ABC gave Koukoulas and other plain packaging advocates airtime to rubbish Kerr's report.

We now know that Kerr was right. An apology is in order but will never arrive. Instead, there is only silence and tumbleweed from those who claimed that plain packaging was a game-changer.

The data

The government's sales figures are divided between domestically produced tobacco products (ATO) and imported tobacco products (customs). They are also divided between manufactured cigarettes (sticks) and rolling tobacco (loose leaf).

To derive the total number of cigarettes sold, you need to combine the ATO and customs figures for both type of products and then subtract the refunds. For loose leaf tobacco, the government calculates that one cigarette contains 0.8 grams of tobacco, ie. 1 kilogram contains 1,250 cigarettes.

In the twelve months before plain packaging was introduced (Dec 2011-Nov 2012), the figures were as follows:

Manufactured cigarettes: 19,738,170,960

Cigarettes from rolling tobacco: 2,447,248,750

Never sold to the public: -284,025,990

Total: 21,901,393,720

In the twelve months after plain packaging was introduced (Dec 2012-Nov 2013), the figures were as follows:

Tuesday, 25 August 2015

Via Clive Bates on Twitter, I see that Simon Capewell has written an article about 'internet trolls' for his newsletter. I don't follow Capewell on Twitter but I do occasionally see his green ink tweets and, weirdly, he sometimes retweets things I say ironically thinking that I'm being serious.

In recent months the UK Faculty of Public Health, of which Capewell is the president, has called for a ban on vaping in indoor places and a tax on sugar. As you might expect, this has not gone down well with a large section of the public. Some members of the public have told him so on Twitter and that makes them industry-funded trolls in the fantasy world of Public Health (Capewell uses the term 'Big Tobacco' three times in his short article, despite the fact that 'Big Tobacco' has no reason to care about sugar taxes and might be positively upbeat about vaping bans).
He writes...

...trolls usefully provide the "scream factor"; a graphic term coined by Mike Daube. Hence the stridency and volume of protest increases with the potential effectiveness of the proposed intervention (and therefore the feared reduction in consumption and industry profits). My colleagues thus knew they were succeeding when their respective proposals for tobacco control and sugar taxation elicited death threats...

There is no way of saying 'no' to these people is there? If you say yes, it encourages them. If you say no, it encourages them. And if you scream 'no' they know they're succeeding. You wouldn't want to go on a date with one of them, would you?

It strikes me that Capewell and his ilk are suffering from a sort of reverse persecution complex. Whereas a paranoid man is surrounded by people who like him but is nonetheless terrified that they secretly hate him and are in a conspiracy against him, the 'public health' zealot is convinced that people secretly like him and are only pretending to hate him because of some sort of conspiracy.

Just as nothing can build up the confidence of a man suffering from paranoia, nothing can shake the confidence of a self-righteous prig.

The issue of paternalistic lifestyle regulation is broad, but I would like to make two general points that I hope the committee will bear in mind during its investigation. The first relates to ethics, the second to costs.

A large part of the modern 'public health' agenda involves trying to stop adult consumers from engaging in behaviour that could pose a risk to their health. These activities do not typically pose a threat to the health of other people and, in a free society, the decision to partake in them should be a free choice for the individual, unencumbered by nudges and barriers from government.

The 'public health' industry is founded on two important lies. The first is that the choice to engage in potentially risky behaviours is not truly free because of external influences. The second is that the consequences of risky behaviour are substantially borne by people other than the individual involved. From these two lies, the 'public health' lobbyists conclude that in order to protect society, they need to protect individuals from their own poor decision-making.

Nobody would claim that people always make wholly informed and rational choices, free from any external influence. However, this applies as much to politicians and pressure groups as it does to private individuals. At heart, 'public health' lobbyists are - to use a wonderfully evocative Australian term - wowsers. They are unable to comprehend why anybody would want to use nicotine, get drunk or eat excessively and so they conclude that people do these things because they have somehow been coerced.

Advertising plays a large in their fantasy of corporate coercion. There is a huge amount of economic evidence showing that advertising does not increase the size of a given market and is only useful in increasing market share for a given company. Wowsers are either unaware of the evidence or choose to ignore it, preferring to believe that businesses somehow control the docile masses through clever marketing. At its lunatic extreme, this extends to a belief that logos and colour schemes on packaging can compel people to take up a notoriously risky and expensive habit.

The wowsers' obsession with putting taxes on products they don't like indicates that they also believe that low prices are coercive. This stems from a crude understanding of the law of demand, which says that demand tends to fall as prices rise. From this, the 'public health' lobbyists assume that higher prices help people to follow their 'true' preferences.

Like many of the wowsers' beliefs, this idea is contemptibly stupid. It should be obvious that depriving people of information (by banning advertising) and narrowing people's options (by raising prices) makes it more, not less, difficult for people to make a free choice. It should be quite obvious that wowsers are not really interested in free choice. They are only interested in people making the 'right' choice, as defined by the wowser community.

The claim that lifestyle choices place a burden on society and, therefore, that society should act to eradicate them, is equally false. It may amuse the committee to read some of the studies which claim that smoking and drinking place a multi-billion dollar cost on society to see how laughable these 'costs' are. Suffice it to say that lost productivity is not a cost to the taxpayer, nor are the emotional costs of being offended by a drunk, nor the many other ludicrous opportunity costs, intangible costs and internal costs that are crowbarred into such reports. I recommend Eric Crampton et al.'s working paper The Cost of Cost Studies to get a flavour of the nonsense peddled in this area.

In short, if somebody wants to eat too much and get fat, that is up to them. It is, quite simply, none of the government's business. The same applies to drinkers and smokers. Clearly, there are people who believe that there are too many obese people and too many smokers, but this has about as much relevance to policy as the fact that there are people who think there are too many atheists. No doubt some people believe that society would be better if there were fewer atheists, or fewer cats, or fewer football games, but in a liberal democracy we do not use the law to impose one person's preferences and prejudices over another's.

In short, a movement that seeks to regulate a person's lifestyle for their own good is unethical. It is also damaging to individuals and therefore to society. Single issue pressure groups are, almost by definition, interested in one aspect of life above all others. The 'public health' lobby regards longevity as the key goal of life and is prepared to sacrifice all other considerations. Whereas ordinary individuals make trade offs between pleasure and risk - costs and benefits - single issue campaigners see no benefits from the activities they seek to proscribe and ignore the costs of their policies.

Costs are often ignored because they are difficult to measure. The enjoyment people get from eating, drinking and consuming nicotine (their consumer surplus) are hard to quantify but are clearly important. They are, after all, the whole reason why people do the things of which the campaigners disapprove. Whatever benefits to health a policy may bring, the loss of consumer surplus that results from the activity being curtailed must be included as a cost.

Other costs are more obvious, but are downplayed or denied by the campaigners. Tax rises and over-regulation fuel the black market. Sin taxes take a disproportionate share of income from the poor. Excessive rules and bureaucracy damage businesses. Cycle helmet laws discourage people from cycling. Restrictions on e-cigarettes keep people smoking. 'Public health' lobbyists deny that these negative unintended consequences exist and devise studies to prove that black is white. I could give many examples of junk science and advocacy-based quackery being published in peer-reviewed journals on everything from obesity to plain packaging. The committee may wish to ask why so much of it is directly funded by the taxpayer.

This last point is worth underlining. The 'public health' agenda is the product of a small elite who think they know best for the masses. It has never been a popular, grass roots movement. The people involved have every right to voice their opinion and agitate for political change, but taxpayers should not be forced to fund their activities.

SIR – Christopher Snowdon suggests that taxpayers shouldn’t foot the bill for e-cigarettes. Yet taxpayers do exactly that for the costs of smoking.
The costs of tobacco use in England are £13.8 billion a year, far exceeding the £7.6 billion in tobacco duty collected in 2014-15.

It is tiresome to see societal costs being mistaken for costs to taxpayers over and over again, but I'll assume good faith and imagine that CRUK are being stupid rather than dishonest here. The £13.8 billion is a figure devised by the think tank Policy Exchange a few years ago. I have written about it before. It includes various dubious costs, such as more than £5 billion in lost output due to smoking breaks. Even if you think smoking breaks cost the economy £5 billion (and I don't), it is clearly not a cost to the taxpayer. Lost productivity costs are ultimately borne by employees, ie. smokers in this instance. They are not external costs and they are certainly not costs to the state. Taking the Policy Exchange figure and comparing it to the amount collected in tobacco duty is an apples and oranges comparison.

The £7.6 billion figure cited by CRUK is simply wrong. In 2014/15, the government collected £9.5 billion in tobacco duty. VAT of twenty per cent was charged on the duty, leaving a total of £11.4 billion. This doesn't include the VAT paid on the product itself, nor does it include any of the revenues that stem from the manufacture and retail of tobacco products.

The £7.6 billion figure is the amount of tobacco duty, absent of VAT, collected on home-produced cigarettes. It does not include imported cigarettes, rolling tobacco, cigars or other tobacco products. It is a pretty amateurish mistake to make. Is CRUK deliberately trying to mislead us here?

The idea that the tobacco industry, the architect of this epidemic, pays a fair share is a myth.

Tobacco duty isn't paid by the tobacco industry. It is paid by consumers, ie. taxpayers. The tobacco industry pays corporation tax, but CRUK doesn't mention that and it is fairly insignificant compared to the billions paid by smokers. There is no doubt whatsoever that the £11.4 billion paid in tobacco duty vastly outstrips the cost of smoking to the government. Smoking not only makes the government a fortune, it also saves the government a fortune.

Tobacco is the leading preventable cause of cancer worldwide. E-cigarettes are almost certainly far safer. The EU Tobacco Products Directive is not “meddlesome and counter-productive”. Instead, it will create a system where e-cigarettes can be licensed as a medicinal product when evidence shows they may be effective in helping people to stop smoking, which kills two in three long-term users.

It's interesting to see the 'kills two in three' factoid being repeated as fact. This comes from a single Australian study published last year. All previous estimates have estimated that smoking kills a quarter to half of all long-term users. Isn't that enough? Does CRUK really have to use one outlying study to inflate the risks of smoking?

That is a minor point, however. The real issue is whether the TPD is meddlesome and counter-productive. It is, but not because it 'it will create a system where e-cigarettes can be licensed as a medicinal product'. We don't need the EU for that and nobody really wants it, apart from the pharmaceutical industry and people who hate e-cigarettes. The TPD is counter-productive because it will ban a vast array of fluids and devices for no good reason. It will ban advertising for no good reason. The effect of the EU's idiotic hyper-regulation will be to create e-cigarettes that nobody will want to use.

Vapers need to remember that CRUK lobbied hard for this. Indeed, they wanted the EU to go much further.

When Public Health England put out a not-as-bad-as-it-could-have-been report about e-cigarettes last week, quite a few people fell for the public health racket's good cop/bad cop routine. I have even seen one e-cigarette company raising money for CRUK. I hate to be the bearer of bad news, but there are very few good cops in the racket. ASH, Public Health England, CRUK, the Faculty of Public Health - you name 'em - would all be very happy with medical regulation of e-cigarettes. That's what they lobbied for for and they're the reason the TPD is the way it is. They are incorrigible liars and meddlers and always will be. The fact that there might be some some even worse people in other countries doesn't change that.

Friday, 21 August 2015

Still on holiday. The following is a short article I wrote to explain what lifestyle economics is all about and why it matters. You may be interested to compare it with this article from the newly formed UK Public Health Network which says that the word 'lifestyle' should be banned because it implies that people are free.

If market liberals stand idly by as the state sets prices, restricts
commercial speech and demonises industries (and their customers), they
will stand for anything. Under the pretext of ‘public health’, basic
levers of competition—price, content and marketing—are increasingly
falling under state control. With the advent of minimum pricing and
plain packaging, the possibility of the government dictating how much a
product sells for and what it looks like has become very real.

These developments are of no little concern to free marketers and
social liberals. We are told, for example, that the obesity “epidemic”
requires us to accept “a more invasive role for government.” The European Union openly discusses the need for “lifestyle regulation”.
When New York mayor Michael Bloomberg decided that it should be against
the law to sell a pint of Coca-Cola, a professor of medicine declared
that: “The trivial issues of personal freedom
in this case pale before the public health and welfare exigency.”
Although it is predicted that one in three children born today will live
to the age of 100, we are told that our health is at risk like never
before from “non-communicable diseases” caused by our lifestyles. In the
face of this “crisis”, we are expected to sacrifice liberty as if we
were on a war-time footing.

Some would argue that the liberties under threat are of a minor nature,
or are only of concern to the industries involved. But it is not the
businessman who suffers most when prices rise and choice is
restricted—he may find ways of profiting from both—but the consumer. And
whilst it is inevitable that when authorities infringe on liberty, they
begin with products and activities which are controversial or obscure,
liberals recognise that there is an important issue of principle at
stake that goes far beyond the unpopular and perhaps unsavoury test
case. It therefore falls to liberals to defend “trivial issues of
personal freedom”. If they do so, the bigger issues of personal freedom
often take care of themselves.

This is not merely a philosophical position. The hazards and failures
of state paternalism can be shown empirically, and the Lifestyle
Economics workstream will put hard evidence at the heart of all its
publications. Even if we accept that policy should be viewed through the
narrow lens of ‘public health’, many of the interventions recommended
do not work on their own terms. Every man-made law must overcome the law
of unintended consequences and the law of demand. Time and time again,
we see well-intentioned but ill-considered policies backfire by fuelling
the black market, exacerbating poverty and encouraging more harmful
consumption.

Adam Smith said that he had “never known much good done by those who
affected to trade for the public good”. The same might be said today of
those who purport to act in the public interest today, whether they be
self-appointed protectors of ‘public morality’ or those who work in that
nebulous and ever expanding industry of ‘public health’ which today
provides the mandate for almost limitless state interference in what we
eat, whether we smoke, how much we exercise, how much television we
watch, how many items of fruit and veg we eat, how many units of alcohol
we drink, whether a price is too low or too high, if a packet of crisps
is too large or a pack of cigarettes too colourful, or a pint glass too
tall.

Free market liberals have warned of the dangers of ‘slippery slope’
regulation for many years. They argued that the treatment being meted
out to smokers would one day be dished out to consumers of any product
which carries a risk to health or morals, however small. “Should the
State dictate how many sausage butties I have for breakfast?” one
prominent doctor asked rhetorically in the Times. “Should the Health Minister be e-mailing me about my five-a-day broccoli and bananas?” His answer? “Yes and yes.” “If the advertising of tobacco can be banned because smoking harms the individual,” wrote another public health professional, “should not all advertising be much more circumscribed because the consumption it engenders harms the planet?” With fizzy drinks, ‘junk food’, alcohol, meat, cars and sugar
now being lined up as “the new tobacco” we start this programme from
halfway down that slippery slope. All but the most pious abstainers from
vice now find themselves in the cross-hairs of some single-issue
pressure group or other.

When the writer George Ade reflected on how prohibition had conquered
America in the 1920s, he recalled that “the non-drinkers had been
organising for fifty years and the drinkers had no organization
whatsoever. They had been too busy drinking.” Ordinary consumers are
often too busy to defend their lifestyles against well-organised special
interest groups. Businesses often spend too much time protecting their
narrow interests in the short term and fail to see the bigger picture.
The Lifestyle Economics workstream aims to show that bigger picture and
to reaffirm that the interests of consumers are best advanced by the
provision of accurate information, low prices and a wide range of
choices in a competitive marketplace.

Thursday, 20 August 2015

The next in this series of excerpts from IEA lifestyle publications is from Closing Time. It looks at what should and shouldn't be done to save the British pub...

CAMRA

Given CAMRA’s preoccupation with PubCos, it is not surprising that their prescription for the ailing pub trade focuses on ‘PubCo reform’. They are campaigning for ‘guest beer rights’ and the ‘choice of paying a higher rent in exchange for being free to buy beer on the open market’. Both of these policies would sever the beer tie and fundamentally undermine the PubCo model.

The term ‘guest beer’ evokes an image of a cask of craft ale sat behind the bar of a picturesque tavern, but if a guest beer option was made available to PubCo tenants, it is more than likely that they would select their most popular lager as a guest beer, buying it at the market price and selling it at a higher margin. This would unbalance the pub franchise model of higher wholesale costs for alcohol and lower costs for property rent and other facilities. Whilst some campaigners would be happy to wreck the PubCo model, it should not be the aim of government.

CAMRA also proposes making planning permission a legal requirement before a pub can to be converted for other use or demolished. It is difficult to see what this will achieve. There may have been instances where badly run, but viable, pubs are sold off to developers, but these sales take place on the open market where prospective publicans can make their own bid. The price may be too high for the pub to be sold as a going concern, but tying the sale up with red tape will not make it any cheaper for the publican. It is more likely to leave derelict pubs standing empty for long periods with no good reason.

The IPPR

In Pubs and Places (2012), the IPPR, a left-of-centre think tank, recommended that some pubs receive tax relief and be allowed to apply for third sector grants as ‘community interest companies’ (Muir 2012: 59). The IPPR accepts that regulation has placed a financial burden on pubs, but rather than abolish or amend costly legislation, it advocates ‘providing some compensatory support for community pubs through other means’ (Muir 2012: 19). In short, it wants taxpayer subsidies.

The IPPR’s concern is limited to what it calls ‘community pubs’ which, it says, ‘can be distinguished from town centre bars which serve mainly after-work or weekend drinkers and which have been the focus of concerns about binge drinking in recent years’ (Muir 2014: 5). The IPPR says that community pubs have ‘two distinct but intrinsically related functions. One is as a retail outlet to sell alcoholic drinks and the other is as a place for social interaction’ (ibid.). If these are the criteria, it is difficult to see the distinction between community and non-community pubs in practice. Both are places of social interaction including, and perhaps above all, those which are associated with ‘binge drinking’. Nevertheless, the IPPR not only wants ‘community pubs’ to receive state aid, it thinks that ‘any business that also acts as a centre of community’ should receive 50 per cent business rate relief (Muir 2012: 58).

The IPPR’s approach exhibits some of the reactionary protectionism that is often found in the pub preservation movement. There is a long history of self-proclaimed champions of the pub being more concerned by pubs changing than closing. Christopher Hutt’s 1973 polemic about the ‘death of the English pub’ was not so much about pubs dying as them being, in his words, ‘tarted up’. Today, many of his complaints seem perverse, including his lament that ‘Luxurious soft furnishings replace the wooden seats, wall-to-wall carpeting covers those worn-out old tiles, the ornate mirror and the dart-board make way for a set of tasteful hunting prints’ (Hutt, 1973: 116). For the IPPR, ‘the traditional community pub is felt to offer certain things that are becoming rare in a society being shaped by global commercial pressures’ (Muir, 2012: 40).

The problem with the IPPR’s recommendations is that they are concerned with resuscitating one particular type of pub without addressing the underlying lack of demand. Using taxpayers’ money to preserve a sentimentalised version of the ‘community pub’ is likely to deter innovation in an industry that has always been evolving and needs to adapt to changing tastes now more than ever. State funding and tax breaks for a select few pubs would distort the market in favour of loss-making businesses which would be incentivised to tick government boxes rather than meet demand. It may save a few pubs in the sense that the physical buildings would remain in tact, but some might wonder whether the IPPR’s vision of public houses as day centres/crèches/post offices would preserve them as pubs in any meaningful sense.

The IPPR also supports minimum pricing, a policy that offers little hope for publicans. A 2013 YouGov survey found that only 15 per cent of drinkers would drink less at home if minimum pricing was introduced (YouGov 2013: 31). Of this minority, only 2 per cent said they would drink more in the pub as a result (ibid.: 34). In total, only 0.3 per cent of the survey’s drinkers said they would drink less at home and more in the pub if minimum pricing was introduced. By contrast, 39 per cent said they would drink less in the pub and 50 per cent say they would drink the same amount in the pub (ibid.: 39). Minimum pricing will result either in drinkers drinking less or having less disposable income. Neither outcome would benefit pubs.

The Department for Business, Innovation and Skills

In June 2014, the Department of Business, Innovation and Skills responded to concerns about PubCos by unveiling a new statutory code for pubs. The final draft is unfinished at the time of writing, but it is likely to include a provision for tenants of large PubCos to request an independent adjudicator to set their rent if they feel that the PubCo’s rent is too high. The aim is to stop PubCos squeezing tenants, who already pay a higher price for alcohol (the ‘wet rent’), with an excessive ‘dry rent’.

The government’s explicit objective is to ensure that PubCo tenants are ‘no worse off than their free-of-tie counterparts’ (Department for Business, Innovation and Skills, 2014). This ‘no worse off principle‘ (ibid.: 43) may be laudable in theory but it is unworkable in practice. It would mean that pubs which are badly run or suffering from low demand will be given lower rents by government diktat. The government has conceded that rents could even fall to zero under such a system (Bothwell, 2014). It is questionable whether this would be seen as ‘fair’ by more successful publicans in either the tied or free-of-tie sector, let alone by the PubCos themselves, but it would certainly create major distortions in the market, as the Royal Institute of Chartered Surveyors (2014) explains:

‘By requiring all rental agreements to be based on valuation as opposed to market forces, it may significantly reduce the number of open market, freely negotiated transactions. Eventually, the number of open market transactions may fall to zero in the tied lease market, thus the market will become artificial. There will be no true market evidence. This may deter market participants (landlords) from investing in the sector. It will put pressure on existing landlords, including pubcos and brewers, to exit the market or find different methods of operation.’In a market economy, rents are not set according to some objective standard, but by negotiation between two parties to find a mutually acceptable price. Both parties are free to walk away from a deal that is unacceptable or unaffordable. Some would argue that PubCos have the upper hand since they own the property, but this could be said of all rental negotiations. Unless you believe, as some anti-PubCo campaigners do, that PubCos wish to put their own tenants out of business, the landlord needs a tenant as much as the tenant needs a landlord. There is rarely a need for an adjudicator to establish the market price because the rent agreed between two parties is the market price.

Furthermore, it is doubtful whether an adjudicator can make an objective assessment of a pub’s rental value, let alone one which ensures that the tenant is ‘no worse off’ than his free-of-tie counterpart (London Economics, 2013: 13). No two pubs are alike and no two tenants are alike. Even if a surveyor could find two comparable pubs in the tied and free-of-tie sector, he would not have access to the financial accounts of the free-of-tie pub with which to make a calculation. Real solutions

It is not the intention of this paper to prop up a dying industry. If pubs are closing because people prefer to drink at home (or drink less), it is not the government’s business to rescue them. But if, as this paper argues, many pubs are closing because government policy has actively discouraged people from spending as much time in the pub as they would like, it is time to undo the damage.

The evidence strongly suggests that demand for pubs has been artificially reduced by excessive taxation and regulation. What follows is a four-point plan to undo some of the damage that has been wrought by government policy.

1. Reduce alcohol duty

British drinkers pay 40 per cent of the EU’s entire alcohol duty bill (European Commission, 2014) and alcohol taxes are regressive (Snowdon, 2013). CAMRA has called for a freeze on beer duty until 2020. The government should go much further by halving all alcohol duty to bring it closer to the European average. This would reduce the cost of living, reduce alcohol fraud and create jobs in the hospitality industry.

2. Reduce VAT and set a lower rate for cooked food

VAT should be lowered from 20 per cent to 15 per cent to reduce the cost of living and alleviate the regressive effect of indirect taxation (ibid.). This would reduce the cost of food and drink in pubs and other venues. There is also a strong case for setting a lower rate of VAT on food served in pubs and cafés.

Currently, food sold for cooking and eating at home is exempt from VAT whereas cooked food is taxed at the standard rate. Rising rates of VAT, from 8 per cent to 15 per cent to 17.5 per cent to 20 per cent have worked in favour of supermarkets and against pubs, cafés and restaurants.

The tax discrimination between cooked and uncooked food is somewhat arbitrary, as highlighted by the controversy over the ‘pasty tax’ in 2012.5 Many EU countries have lower rates of sales tax for food served in bars and cafés (BBPA, 2014: 62). Typically, these countries have lowered the VAT rate by at least 50 per cent. The UK should do likewise.

3. Amend the smoking ban

The Labour party’s 2005 manifesto contained a pledge to ban smoking in pubs which sold food while promising that ‘other pubs and bars will be free to choose whether to allow smoking or to be smoke-free’ (Labour Party, 2005). After intense lobbying from anti-smoking groups, this pledge was abandoned and the UK was given one of the most uncompromising smoking bans in the world. This has been devastating for many pubs and there is clearly a market for indoor venues that allow smoking in one or more rooms. The UK should follow the lead of the many European countries that allow the hospitality industry to accommodate smokers.

4. Abolish cumulative impact zones and the late night levy

At a time when pubs are closing in their thousands, government policy prevents new pubs from opening in areas of high demand. England and Wales currently have around 180 ‘cumulative impact zones’ in which there is a presumption that a new alcohol licence will be refused unless the licensee can demonstrate that it will have no adverse effect. This is a heavy burden of proof and it is costly to challenge the local authority in court. These zones should be abolished to allow demand to be met by the market. Sufficient laws already exist to regulate and, if necessary, close down venues that are associated with anti-social behaviour.

Similarly, the late night levy - an additional cost that pubs have to pay some local councils to open after midnight - should be scrapped. The levy has led to pubs in the late-night economy reducing their hours, thereby distorting investment decisions and reducing property values. Conclusion

This study concludes that taxation, regulation and falling real wages have been the leading causes of the decimation of the UK pub industry since 2006, responsible for around 6,000 pub closures. The smoking ban and the alcohol duty escalator are particularly culpable.

Long-term cultural changes have been responsible for a further 4,000 pub closures. Other factors, such as the decline in alcohol consumption, may have played a part, but we cannot rule out reverse causality, particularly with regards to the exceptionally large decline in beer consumption.

The blame attached to PubCos has been greatly overstated - there is little evidence that their pubs have closed at a faster rate than those in the rest of the sector - and the solutions proposed by CAMRA and the government are misguided. A better approach would be to reduce taxes and cut regulation.

Wednesday, 19 August 2015

Public Health England allegedly recommended that e-cigarettes be handed out by the NHS on prescription today. Their reality-based analysis of vaping is welcome but the specific recommendation is misguided. I wrote about it for the Telegraph. Do have a read.

I'm on holiday this week so the next four posts will all be excerpts from recent IEA publications. This is from Drinking, Fast and Slow...
Ten years after the Licensing Act was introduced, the evidence suggests that it had neither a strong negative nor strong positive effect on violent crime, alcohol-related health problems, public order or Accident and Emergency admissions. It coincided with a significant decline in per capita alcohol consumption, binge-drinking and violent crime, but it is impossible to tell whether these trends are linked to the Act in any way. A cautious interpretation of the data suggests that the Act may have improved public health and public order somewhat. It certainly did not worsen them.

Licensing is no longer a live political issue. ‘24 hour drinking’ is occasionally resurrected in the press as a threat to public order, but there is little support for repealing the Act and the temperance/public health lobby has shifted its attention to the off-trade where most of the nation’s alcohol is consumed. ‘Given its limited practical effects,’ writes Henry Yeomans in Alcohol and Moral Regulation, ‘the reaction to the new Licensing Act 2003 fits the classic definition of a “moral panic”; a disproportionate reaction prompted by an exaggerated sense of a threat’ (Yeomans 2014: 180). The term ‘moral panic’ can be overused but it is an apt description of what occurred before and immediately after the introduction of the Licensing Act. The prophecies of doom that were mainstream opinion in 2005 now look hysterical and absurd. How can they be explained?

It could be argued that disastrous consequences were averted by factors that could not have been predicted in 2005. By reducing disposable incomes, the economic crisis of 2008 may have led to less demand for pubs and clubs. The reintroduction of the alcohol duty escalator in 2009 also made alcohol less affordable. But whilst these factors may have played a part in reducing alcohol consumption from 2008 onwards, they cannot explain the decline between 2004 and 2007, nor the decline in violent crime and binge-drinking rates that preceded the financial crisis.

It could also be argued that other parts of the Licensing Act successfully tackled problems in the nighttime economy and mitigated the negative impact of extended opening hours. It is true that there was much more to the Licensing Act than extended closing times. Some of its provisions, such as making it easier to close down troublesome pubs, may have helped address public order problems, but these provisions were well-known in 2005 and few of the doom-mongers expressed confidence that they would bring major benefits.

Finally, it could be argued that catastrophic consequences were averted only because pubs did not, in the event, choose to open as late as the critics expected. Certainly, there were unrealistic expectations of how long pubs, bars and clubs would stay open under the new licensing regime. There was never any realistic prospect of widespread ‘24 hour drinking’ even though the Act allowed for it in theory. As of 2010, there were 7,600 premises licensed to sell alcohol at any hour, but most of these were hotels (which had always been able to sell alcohol to guests at any time) and only 13 per cent were pubs, bars and nightclubs (Antoniades and Thompson 2010: 24). Most Licensing Authorities have no pubs, bar or clubs with a 24 hour licence in their area (ibid.: 25).

It is unclear how many pubs actually sell alcohol 24 hours a day, but the number is very small indeed. According to the British Beer and Pub Association: ‘a mere 200 pubs have been granted permission to open for 24 h[ours] and, as the Home Office will confirm, none do’ (Hayward 2009). The Association of Licensed and Multiple Retailers said in 2008 that only two pubs used their 24 hour licence (DCMS 2009: Ev 66). Whatever the exact figure, 24 hour pubs are extremely rare, if they exist at all.

A 2007 survey of 45,000 licensees found that pubs closed, on average, 27 minutes later after the Act was introduced. Registered clubs closed 56 minutes later and nightclubs closed 31 minutes later (Thompson 2009). These modest extensions in business hours are far removed from the ‘24 hour drinking’ caricature and they raise an important question that is rarely asked about the Licensing Act. Why have more pubs not stayed open longer?

In some instances, the answer lies with local councils not issuing licences, but this does not explain why the tens of thousands of pubs which have the relevant permissions do not use them to the full, nor does it explain why the handful of 24 hour licences are rarely, if ever, used. By 2008, four out of five pubs and clubs had a licence to open until at least midnight and yet most still closed at 11pm, even on Saturday night (Hough et al. 2008: 5). Why? The answer, surely, is that there is insufficient demand for round-the-clock drinking. This is not to say that nobody wants to drink at all hours, only that there are not enough customers with this preference to make it worthwhile for a business to cater for them. As one licensee told researchers from the Home Office: ‘We can open till 1am during the week if we wish to. But because the trade is not around, especially midweek, we shut at 11pm’ (Hough et al. 2008: 6).

If there was sufficient demand, more pubs would close in the early hours of the morning every night. Some pubs would be open all night long. Those who feared the worst from the Licensing Act over-estimated the public’s thirst for drink. Their belief in Britons as ignoble savages for whom the law was the only barrier to permanent inebriation led them to assume that demand for alcohol was virtually limitless. This proved to be far from true. It is therefore not good enough to say that the doom-mongers might have been proven correct if more pubs had used their licences to the full. The fact that most pubs still close at 11pm out of choice is proof that their fundamental assumption about the demand for drink was wrong.3

That is not to say that there is no demand for flexible closing times. Clearly there is, particularly at the weekend and on special occasions, and the Licensing Act helped the trade to satisfy it. ‘24 hour hour drinking’ may be a straw man, but the post-2005 change in opening hours has not been trivial. Although pub hours were extended by only 27 minutes a day on average, these extra hours were concentrated in certain pubs (those which chose to close later) and on certain days (primarily at the weekend). An extra 27 minutes per pub represents more than 13 million extra trading hours each year, with many more additional hours in other venues. In nearly all towns and cities - and in many villages - those who want to drink until midnight, and often later, are now able to find at least one pub or bar in which they can do so. Allowing a greater supply of alcohol did not lead to greater demand, but it did allow supply to become more closely aligned with customers’ preferences, as Tony Blair intended. Given the choice, customers generally preferred to drink less, drink later and drink locally.

This poses a challenge to the availability theory of alcohol, which dictates that longer opening hours lead to more drinking, more drunkenness and more alcohol-related harm. This orthodoxy was clearly expressed in Emergency Medicine in 2005: ‘Availability of alcohol is associated with increased use, which is in turn related to increased alcohol related injury and illness’ (Goodacre 2005). This is what was predicted by public health campaigners, senior policeman, judges and the media before the Act was introduced. But we now know that alcohol consumption did not rise. On the contrary, it fell sharply and is now back to the level of the early 1980s. Insofar as ‘binge-drinking’ is a measure of drunkenness, that too has fallen sharply, particularly amongst young people. Alcohol-related mortality has not risen since the Act was introduced, though it had been rising for many years before. Violent crime and late night assaults have continued to decline, albeit sometimes occurring later in the night. The number of alcohol-related traffic accidents has also fallen.

If these findings are ‘counterintuitive’, as one group of researchers described them (Humphreys et al. 2013: 7), it is because of the dominance of availability theory in public health circles. Temperance societies have always believed that ‘the line between order and chaos can be as thin as a few extra hours of drinking time’ (Yeomans 2009: 7) and this belief lingers in the modern public health movement. Availability theory is not without supporting evidence. Prior to the Act’s implementation, temperance and public health campaigners made frequent mention of evidence from Ireland and Australia where a rise in alcohol-related problems had coincided with the liberalisation of licensing laws. But whilst there were studies showing a correlation between availability and alcohol-related problems in some jurisdictions (Popova et al. 2009), there were also studies which found no increase in alcohol-related problems when licensing laws had been relaxed (Vingilis et al. 2005, Fitzgerald and Mulford 1992), including in the UK itself (DeMoira and Duffy 1995, Graham et al. 1998).

The evidence for availability theory was never as solid as its advocates claimed - and they knew it. When the new licensing proposals were first aired in 2001, an editorial in the Journal of Public Health Medicine noted that ‘when opening hours were lengthened in Scotland in 1976 and in England and Wales in 1988, fears that this would lead to a major increase in alcohol consumption and alcohol-related harm were not realised’ (Kemm 2001). The experience of England and Wales since 2005 is another blow to availability theory. The World Health Organisation now concedes that ‘There is a lack of clear evidence currently available on the impact of changes to permitted drinking hours on violence, with studies reporting contradictory results’ (WHO 2007: 5).

The more extravagant claims of the Licensing Act’s supporters have also been shown to be ill-founded. Manchester did not become Madrid and Birmingham did not become Bologna. The ‘continental café culture’ never materialised. Given the British weather, that should come as no great surprise, but café culture was always a red herring. It was clear from the start that Tony Blair’s aim was to diversify the night-time economy, allow greater freedom of choice and improve public order. On those criteria, the Licensing Act has been a qualified success. The DCMS Select Committee that reviewed the legislation in 2009 concluded that ‘the major impetus for changes seen in licensed venues appears to have come from consumer choice and market forces. However without the alterations to the licensing regime introduced by the Licensing Act such changes might not have been possible’ (DCMS 2009: 21). By relaxing licensing laws, the government made markets free (or freer) to do what markets are supposed to do: allow people to pursue their preferences. That it did so without aggravating - and possibly alleviating - alcohol-related problems is a welcome bonus.

Tuesday, 18 August 2015

This is a guest post by Chris Oakley about last week's smoking ban/still birth claim...
Last week the long suffering public was subjected to press coverage of yet another smoking ban miracle. According to its supporters the ban in England has reduced still births by 8% and saved 1,400 babies in the process. Smoking ban advocate and public health activist Jasper Been claimed that there is “enough evidence to show definitively that the smoking ban was working, and that other countries should follow suit”

How could they fail to do so faced with compelling scientific evidence and saved babies? I can think of several reasons, not least of which is that all of the “evidence” for health benefits to date has been produced by partisan activists such as Been and none of it stands up to more impartial scrutiny. A second important reason not to take Been and friends seriously is the appalling quality of their own evidence and the dubious methodology used to obtain it.

This latest baby saving conjuring trick was published in Scientific Reports a journal that claims to publish only good science but appears to have very low acceptance standards. Good scientific papers contain detailed methods, data and carefully explained results that allow other people to challenge, support, build on and repeat the work. Public health papers bear little relation to science. Their authors, like magicians, try to hide how they pull off their illusions by not fully explaining their methods and showing only carefully massaged data and results.

This paper is no exception. We know that Been et al used regression analysis and Office for National Statistics (ONS) data sets but the only results relevant to the 8% claim appear is a table that contains only odds ratios that compare the risks of still births 4 years post ban with 11 years pre ban. We are given no details about how the magic numbers were created and tested but we are assured that various variables have been taken into account and that the ratio is 0.922, which represents a 7.8% risk reduction post ban. The 1,400 virtual babies are then calculated using an absurd counterfactual algorithm to shape shift data.

I don’t have fancy statistical software nor grant money to pay the ONS for monthly data but the ONS annual data for still births is freely available and I do have Excel. Using those rudimentary tools and a bit of background research, I believe that I have worked out how this trick was pulled off.

The ONS still birth data goes back to 1927 and shows pretty consistent decline since the 1930s with the odd blip along the way. If we look at relatively recent data we see two such upward blips.

The sharp increase in 1993 is the result of a change in definition whereby foetuses were classified as still born at 24 rather than 28 weeks. Classification was consistent from 1993 onwards but Been et al started their analysis from 1995. I wondered why.

If we look at the pre-ban control period starting from 1993. The crude linear fit is not very good because there are obvious variations in a small number of data points, but it does serve to illustrate that the overall trend was fairly flat.

But if we use Been’s 11 year control period from 1995, the 2002 – 2005 upward blip now pushes the overall trend upwards...

This might be important, because with upward trending control data, even flat post intervention data can be interpreted as a fall in risk, especially by those keenly searching for one.

I thought it a bit strange that the authors had used uneven time periods pre and post ban. The graph below demonstrates why adopting the more robust strategy of using identical four year time periods either side of the ban might not have served their purpose.

Before the ban, annual still birth incidences were declining rapidly. Post ban the trend is flat.

The sharp fall pre ban is a consequence of the all-important second blip in the data when for two consecutive years, rates increased. After 50 years of consistent falls, the rise in 2002 came as something of a shock. So much of a shock that the ONS launched an investigation in which it tested many possible variables including some that Been et al claim airily to have adjusted for. The ONS could find no explanation for the rise. Been et al did not attempt to.

So the trick depends on comparing post ban data with control data so out of line with an 85 year trend that they sparked a national investigation. Unexplained anomalies are the last thing that honest scientists want in a control because they have enormous potential to skew results and invalidate conclusions. Public health activists are often rather less discerning, especially when outliers conveniently skew the control data in a direction that suits their agenda.

Been et al might well be right about the risk of still births being 7.8% lower post ban but if that is the case they are most probably measuring the magnitude of an anomalous upward blip in the pre ban data rather than a downward effect created by the intervention. Being advocates, they have simply assumed the latter, found an unfussy journal that is happy to publish statistical conjuring disguised as science, and then run to the media shrieking for more bans. It is clear from the ONS data that the decline in still births happened before the smoking ban was introduced and was no more than regression to the mean.

Science Reports is not the first journal to fall for the convenient anomalous peak in the control data trick. It was recently used to claim a childhood respiratory admissions miracle in the European Respiratory Journal and a childhood asthma miracle in Pediatrics. Been and his pals have moved on from merely helping children to actually saving babies but their dubious MO remains the same and journal editors keep on falling for it.

I'm on holiday this week so the next four posts will all be excerpts from recent IEA publications, starting with this from Sweet Truth (written with Rob Lyons)...

While Action on Sugar claims that there is underhand lobbying going on, it also trumpets the fact that the health secretary, Jeremy Hunt, had asked them to produce some proposals for tackling obesity (Action on Sugar 2014). Since these proposals are quite typical of this kind of campaign, it is worth looking at them in some depth. With only one exception, they are all predicated on the belief that consumers are unable, rather than unwilling, to make the ‘correct’ choice about what to eat.

Government limits on the use of sugar

1. ‘Reduce added sugars by 40 per cent by 2020 by reformulating foods (a similar programme to salt)’

At the heart of Action on Sugar’s policy agenda is the assumption that consumers are faced with a lack of real choice in the food market because so much food is ‘spiked’ with sugar. Constrained by an ‘obesogenic environment’ which makes healthy choices difficult, if not impossible, consumers are unable to fulfil their true desire to eat less sugar and fat. Action on Sugar’s solution is to force companies to systematically reduce the amount of sugar in the food supply. (Note the anti-sugar campaigners’ schizophrenic attitude to big corporations when it comes to policy prescriptions, seeing them as a way of bypassing consumers to achieve their ends in this instance.) However, as we have seen, the amount of sugar consumed in Britain has fallen significantly in recent decades and there is no evidence that people are constrained by a lack of choice.

On the contrary, there are many low-fat, low-sugar and low-calorie options on supermarket shelves. The fizzy drink market is a good example of this. No products raise the ire of obesity campaigners more than carbonated beverages and yet there is an abundance of low-calorie options available. Diet Rite was launched in the US in 1958 and was followed in 1963 by Coca-Cola’s equivalent, Tab. Coca-Cola alone now produces Diet Coke, Coke Zero and Coke Life. Diet Coke and Coke Zero contain no sugar and Coke Life is a lower-calorie version of Coke, made with a combination of sugar and natural sweeteners. Nearly all soft drink companies produce similar low-calorie and sugar-free varieties. All are widely advertised and all are available on the same shelves, in the same shops and for the same price as their more sugary cousins. It is very difficult to argue that consumers are nudged, let alone coerced, into buying the high-calorie variants. Indeed, Diet Coke overtook Pepsi in 2010 as the second-most popular soft drink in the US (Riley, 2011) and has retained that position since (Beverage Digest, 2014).

In many other categories, there is already a wide range of products with markedly different sugar contents. For example, in breakfast cereals, Frosties contains 37 grams of sugar per 100 grams, but the otherwise identical Corn Flakes contains just three grams per 100 grams. Shredded Wheat contains no added sugar at all. Since there is a large market for heathier foods, companies heavily promote low-sugar and low-fat products and consumers can easily choose what level of sugar they want in the food and drink they buy. To reformulate brands by diktat with the simple aim of reducing sugar is both unnecessary and would limit choice.

Nevertheless, campaigners have called for mandatory reductions in sugar content, a policy that is explicitly modelled on the salt reduction scheme that was agreed between industry and the government of Tony Blair (MacGregor and Hashem 2014). It is unsurprising that Action on Sugar should propose such a move as it shares its key personnel, website and charity registration number with Consensus Action on Salt and Health, but, as one food industry insider told us, reducing salt content is relatively easy compared to reducing sugar. Salt has a role as a preservative and a flavour enhancer, but it can be cut back to a degree over time without driving too many customers away. Reducing sugar content by such a large amount would be a challenge and the resulting products would be very different. Biscuits, cakes and confectionery with markedly less sugar would lose much in texture and flavour. Sugar-sweetened beverages could swap sugar for an artificial sweetener, but many people dislike the taste of saccharin or aspartame (aka Nutrasweet).

For a group called Action on Sugar, this is an odd demand, and seems directly contrary to the views of some of its leading lights, who have professed that dietary fat is not a problem. It does indicate, however, that it is mass-manufactured food - and the companies who make it - that is the real target.

The fact remains that choice is not a problem for buyers of food in twenty-first century Britain. Indeed, there is so much choice that some critics complain of being overwhelmed by the 40,000 products that sit on supermarket shelves (Hastings 2013: 37). The food industry has responded to people’s concern with a vast range of low fat and low sugar products in accordance with the scientific consensus of the day. The idea that the government should force manufacturers to reduce sugar and fat content in individual products by an arbitrary percentage is not a response to a lack of choice in the market, rather it is a response to the fact that many consumers exercise their choice by rejecting the low calorie options.

Advertising bans

3. ‘Cease all forms of marketing of ultra-processed, unhealthy foods and drinks to children’

There is an enormous amount of economic evidence showing that advertisements for established products increase demand for specific brands but do not increase demand for the entire product category (Bagwell 2007, Schmalensee 2008). An advertisement for the butter-like spread Clover, for example, might increase sales of Clover, but is unlikely to increase sales of fatty spreads overall. Despite the evidence that advertising reflects, rather than controls, primary demand, public health campaigners continue to regard advertising as a powerful corporate weapon of coercion which, if curtailed, would lead to consumers abandoning tobacco, alcohol and high-calorie foods. The mere fact that all these products were consumed on a massive scale long before the advent of advertising does not shake their conviction, nor does the conspicuous failure of advertising bans to reduce the consumption of these products in recent decades (Duffy 1995, Qi 2008). Health campaigners are also largely indifferent to the benefits that advertising provides, such as funding the media, incentivising high quality standards and allowing new entrants to break into the market (Harris and Seldon 2014).

In Britain, a broadcasting ban on advertising of foods high in salt, fat and sugar in programmes with a large audience of children has been in force since 2007. The ban appears to have been a significant factor in the closure of ITV's children's television production department. According to one report at the time, 'it is estimated that round 70 per cent of the cost of children’s programmes is funded from advertising and a significant proportion of that comes from food advertising' (Thomas, 2006). Yet the ban has been so ineffective that there have been calls to extend it to any programming before the 9pm 'watershed' (Wallop, 2010). Such a move would be unlikely to fare much better. Children have plenty of direct access to 'junk' food without the need to advertise it, through shops on the way to and from school, for example. In any event, most of the products that campaigners rail against - such as breakfast cereals and ready meals - are bought by parents, not children. (It is because parents frequently watch television with their children that advertisers pick these slots. Campaigners claim that food companies are attempting to harness ‘pester power’ but this cannot explain why payday loans, cleaning fluids, laundry detergent and other adult-oriented products are also advertised during children’s programmes.)

Economist’s assumptions about consumer sovereignty and rationality do not necessarily apply to children (Cawley 2011: 132), but it is not difficult to see how policies ostensibly aimed at ‘protecting’ children from ‘exposure’ to advertising could restrict communication between businesses and adult consumers. Whereas the UK’s existing ban targets programmes that are predominantly viewed by children, a watershed ban targets programmes that are predominantly, though not solely, viewed by adults. It would effectively confine the promotion of a vast swathe of food and drink products, including cheese, bacon, butter, cakes and biscuits, to a few hours late at night. Any kind of broadcast ban would likely reduce the quality and quantity of television programmes and would limit the right of producers to tell the world about their products.

Anti-sugar campaigners have almost as dim a view of consumers as they have of corporations. It is assumed that we are clueless and unwitting fools who accept marketing at face value - a case of 'monkey see, monkey do', a frequent and false claim made against advertising generally. Therefore, the 'experts' - like Lustig and Malhotra - must step in to save us from ourselves. No doubt, campaigners would point to the ban on tobacco advertising and say that the end - the possibility of better health - justifies the means. In our view, free speech - including truthful and honest advertising - should be an absolute in a free society. Most people would agree that alcohol, which is acutely poisonous and can create a potentially dangerous loss of physical control, should not be sold to minors. Cigarettes are a risky product with long-term health implications, so preventing their sale to children is also widely agreed to be sensible. But preventing the advertising of legal food products generally considered to be safe is, in effect, the government choosing what can and cannot be said. There is a commonly used name for that: censorship.

Food campaigners get particularly agitated about the sponsorship of major events such as the Olympics by fast food and soft drink companies. Yet while such advertising may be useful as a means of promoting one brand versus another, there is little evidence to suggest that total sales of fast food are increased by sponsorship of sporting events. In the case of the Olympics, the Olympic Park at London 2012 itself was free of such advertising. Sporting sponsorship may qualify under the remit of 'corporate social responsibility' - companies trying to look good by 'giving something back' to the community. But to suggest that sponsorship automatically leads to sales is to reiterate the view that consumers are dim-wits and flies in the face of a large body of economic evidence.

Moreover, if we are simply vessels for whatever combination of images are displayed to us, surely all this sporting sponsorship would be encouraging the consumers of Coca-Cola, McDonalds and the rest to put on their training shoes or hit the gym? Clearly, that is not happening.

Restricting availability

5. ‘Limit the availability of ultra-processed foods and sweetened soft drinks as well as reducing portion size’

As with mandatory reductions of sugar content in food, restrictions on the sale of food and drink products are an attack on choice. Never mind the problem with defining an 'ultra-processed' food, it suggests a return to the 1970s, when the availability of takeaway food was limited and most shops closed by 7pm. It fits with a policy among some councils of banning takeaway food shops in the vicinity of schools, too. Returning to an earlier example, Waltham Forest council in east London has reportedly turned down 83 per cent of applications to open fast food shops in the past five years (O’Brien, 2014). Such an approach stifles competition, favours incumbents, and distorts the market by preventing supply from meeting demand. This is likely to result in higher prices and poorer quality.

The most high-profile attempt to limit soda portion sizes was in New York. In September 2012, the city's health board approved a plan by the then mayor, Michael Bloomberg, to limit servings in restaurants, cinemas and sports venues to 16 ounces (473ml), though there would be no limit on how many portions a customer could buy, nor would there be any limit on refills. However, the ban would not have applied to convenience and grocery stores. As a result of the uneven application of the ban, the courts ruled the health board had gone beyond its powers (Grynbaum, 2014).

'Nudge' theorists would argue - probably correctly - that even if a customer wanted to order a 32-ounce or even 64-ounce portion - as in 7-Eleven's much maligned 'Double Gulp' - they would be much less likely to do so if they needed to order more than one portion. Yet such a ban would have a limited impact. In the UK, for example, the largest serving of soft drinks at McDonalds is 500ml - barely more than Bloomberg's suggested maximum.

More than anything else, taxes are the most widely suggested idea for how to reduce sugar consumption. Basic economics suggests that if you make something more expensive, demand for it will decline. In November 2014, the Californian city of Berkeley became the first to vote for a large soda tax - in this case, of one cent per fluid ounce. However, whether imposing taxes is effective, fair or efficient is another matter.

As an aside, it could be argued that a ‘junk food’ tax, including on fizzy drinks, is already in place, in effect, in the UK. VAT is not charged on raw meat and fish, vegetables, fruit, cereals, nuts and pulses, bread, and a variety of other foods. But VAT at the standard rate of 20 per cent is charged on alcoholic drinks, confectionery, crisps and savoury snacks, hot food, sports drinks, hot takeaways, ice cream, soft drinks and mineral water. While the fit between ‘healthy’ and ‘unhealthy’ foods and VAT-rating is not perfect (cakes are zero-rated, mineral water is standard-rated), by and large the foods that are supposed to be bad for us are 20 per cent more expensive than they would otherwise be thanks to the tax system. While HMRC does not keep separate figures for these categories, a rough calculation would suggest the income from 20 per cent VAT on snacks (sales in 2013: £3.2 billion (SNACMA, 2014)), confectionery (£5 billion (IBIS, 2015)) and added-sugar soft drinks (£5 billion (BDSA, 2014)) is in the order of £2.6 billion per year.

On the question of effectiveness, soft drink buyers appear to be relatively 'price inelastic', that is an increase in price translates to a reduction in sales, but the percentage decline in sales is less than the percentage rise in price. The economics literature suggests that soft drinks have a price elasticity of 0.79, meaning that a price rise of 10 per cent should reduce consumption by 7.9 per cent (Andreyeva et al. 2010). The confidence interval of this 0.79 figures is very wide, however, and price-sensitive shoppers could avoid a price rise in a variety of ways. Anti-sugar campaigners hope that shoppers will switch to drinking water or, at the very least, switch to sugar-free versions of popular drinks from the much-maligned Coca-Cola and Pepsi. But as mentioned earlier, many dislike the taste of artificial sweeteners (and some fear that they are carcinogenic). Alternatively, price-sensitive shoppers could avoid a price hike by buying larger sizes with lower unit costs or switching to cheaper brands. For example, a two-litre bottle of Tesco own-brand cola is about one-third of the price of Coke. Indeed, ‘private label’ brands (own-brands) took almost as much in sales in supermarkets and stores (£1.51 billion) in 2013 as Coke-branded (£1.19 billion) and Pepsi-branded (£362 million) drinks combined, suggesting that the volumes of own-brand being sold in stores far outstrip the two biggest brands (Britvic, 2014). On the other hand, those with a strong attachment to a particular brand and flavour will simply pay the higher price. Moreover, given the high price of their products in comparison to the cost of production, there is plenty of room for the big beverage brands to cut prices in order to maintain sales. That might hurt their bottom line, but it would reduce the impact of a soda tax on sugar consumption.

There are also practical questions about how such a tax would apply to lower-sugar brands such as Coke Life. If the aim is to encourage reductions in sugar content, applying a flat-rate tax to all sugary drinks would discourage drinks manufacturers from producing lower-sugar alternatives. And how would fruit juices be dealt with when they are still part of the 'five-a-day' message, according to the NHS Change4Life website, but frequently contain as much sugar as fizzy soda?

Which brings us to the question of effectiveness: how much effect does a tax on one supposedly causative element in the problem of obesity actually have? There are numerous confounding factors. For example, Ketan Patel, a doctoral student at Northwestern University in Chicago, argues that the effect of a soda tax on obesity would be limited by the fact that obese people already strongly prefer sugar-free drinks. If calorie consumption from soft drinks falls due to a soda tax, there is also the problem of calorie-substitution - people eating or drinking other products with the effect of offsetting any gain in calorie reduction due to the tax.

A review of the effect of soda taxes by Greek researchers concluded: 'The effectiveness of a taxation policy to curb obesity is doubtful and available evidence in most studies is not very straightforward due to the multiple complexities in consumer behavior and the underlying substitution effects. There is a need to investigate in-depth the potential underlying mechanisms and the relationship between price-increase policies, obesity, and public health outcomes' (Maniadakis, 2013). An American review concluded: 'The limited existing evidence suggests that small taxes or subsidies are not likely to produce significant changes in BMI or obesity prevalence but that non-trivial pricing interventions may have some measurable effects on Americans' weight outcomes, particularly for children and adolescents, low-socioeconomic status populations, and those most at risk for overweight' (Powell, 2009).

Other studies find some positive health benefits from such taxes, but only at fairly high rates and usually only in theory (computer models produce most of the evidence for soda taxes). Taxes that have been implemented in the real world seem to have been too low to have any impact. A 20 per cent tax rate might have some effect, but it would be a difficult sell, politically. Moreover, as with so many sin taxes, the idea really only becomes attractive to politicians in desperate need of revenue. So in 2010, the unfortunately named mayor of Philadelphia, Michael Nutter, proposed a soda tax to help fill the city's $120million budget deficit, promising that 'some' of the money might go to health programmes (NBC Philadelphia, 2010).

Even if such a tax were to have positive health benefits, they would come at a high price. Small reductions in the incidence of obesity and, perhaps, cardiovascular disease would be paid for by large aggregate costs across society. Moreover, the tax would be thoroughly regressive. Firstly, because it would apply no matter what a person's income was, with the poor paying the same tax as the rich. Secondly, because sugary drinks are more popular among the poor, they would actually pay more tax than the well-off, not just proportionally, but in absolute terms.

From an economic perspective, the key question is whether such taxes will be efficient. The best economic justification for a ‘sin tax’ comes when the use of a product creates negative externalities which have to be paid for by others. In the field of public health, this typically means publicly funded healthcare costs. But the tax itself is an externality for consumers of the product. It reduces their consumer surplus. Both the costs and the benefits must be weighed before proceeding.

In Britain, obesity is said to cost the NHS £5 billion a year in healthcare costs. This is widely portrayed as an unnecessary burden on taxpayers, particularly on those who eat healthily and exercise. A tax of 20 per cent on sugary drinks has been proposed as a way of reducing this burden. One of the proponents of the tax, the Children’s Food Campaign, estimates that it would reduce healthcare costs by £15 million a year, but their own figures show that the tax itself would relieve taxpayers of £1,000 million a year (Boseley 2015, Children’s Food Campaign 2013). The cost of the tax would therefore vastly exceed the savings.

As a means of cutting healthcare costs, sugar and soda taxes would be highly inefficient, and as a way of relieving the burden on taxpayers would be counter-productive. It could be argued that a sugary drink tax would at least result in sugar fiends shouldering more of the healthcare costs, but that would not occur in the example above. The Children’s Food Campaign does not anticipate any of the revenue being put towards healthcare costs, nor does it expect tax cuts in other areas; instead, it proposes the creation of a £1 billion per annum ‘Children’s Future Fund’ to provide ‘education and skills’ (ibid.). The costs of healthcare would therefore be distributed between fat and thin as before.

But there is an even more fundamental problem with obesity-related taxes. As van Baal and others have shown, the lifetime healthcare costs of obese people are actually lower than average due to their shorter lifespans (van Baal et al. 2008, Grootjans-van Kampen 2014). Add to this the financial savings to the state that come from a reduced pensions bill as a result of premature mortality and it becomes clear that obesity is not a drain on government resources. On the contrary, it is probably cost-saving. This, of course, is an economic argument, not a moral one, but it illustrates the hazards of presenting moral arguments in economic terms.

Transferring regulatory power to quangos7. ‘Remove responsibility for nutrition from the Department of Health and return it back to an independent agency’

This policy illustrates another element of the modern campaigner's mindset - a desire to distance decision-making over things like lifestyle choices from democratic control. This technocratic, anti-democratic tendency has been rife in political circles for some time. When the Conservative-Liberal Democrat coalition government came to office in 2010, it promised a 'bonfire of the quangos' (the flame soon went out). While campaigners have often found willing listeners in Whitehall's civil service and even among ministers, elected politicians still have to answer to voters. Taking power away from departments and giving it to quangos means that accountability is no longer there.

More ambitious public health campaigners have called for powers to be pushed even further away from the hands of democratic governments. In November 2014, several hundred health groups and individuals wrote a letter to the World Health Organisation - which is itself an unaccountable NGO - requesting a binding international treaty to tackle obesity (Long et al. 2014). This proposed ‘Global Convention to Protect and Promote Healthy Diets’ included many of the anti-market policies discussed above, including ‘restrictions on marketing to children’, ‘compositional limits on the saturated fat, added sugar and sodium content of food’, ‘removal of artificial trans fats’, ‘restaurant calorie labelling’, ‘fiscal measures and financial incentives’ and ‘public health impact assessments in trade and investment policies’. Since national governments are capable of introducing any of these measures of their own volition, a global treaty would serve no other purpose than to impose the views of the Western public health elite on politicians now and in the future.

About Me

Writer and researcher at the Institute of Economic Affairs. Blogging in a personal capacity.
Author of Selfishness, Greed and Capitalism (2015), The Art of Suppression (2011), The Spirit Level Delusion (2010) and Velvet Glove, Iron Fist (2009).

"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience."